Bill > HB2583

This bill establishes the Hawaii Micro-Lending Credit Enhancement Program within the Department of Business, Economic Development, and Tourism to address the limited access to small-dollar loans for Hawaii's small businesses, particularly startups and sole proprietors, who often struggle to secure funding from local lenders due to risk tolerance and a lack of credit enhancement tools. The program will offer "credit enhancement," which includes mechanisms like loan loss reserves or partial guarantees, to encourage "eligible lenders" (banks, credit unions, etc.) to make "micro-loans" (small loans as defined by federal regulations) to "qualified borrowers" (for-profit small businesses operating in Hawaii). To fund these enhancements, the program will allow for borrower fees of up to one percent of the loan principal, which will be deposited into lender-held loan loss reserve accounts, and the state will provide matching contributions to these accounts. A dedicated "Hawaii Micro-Lending Credit Enhancement Special Fund" will be created to hold various funds, including federal moneys, grants, and donations, and will be used for credit enhancement, program administration, and reporting. The Department will be responsible for administering the program, adopting necessary rules, and will be required to submit an annual report to the Legislature detailing the program's performance, including the number and dollar amount of loans, participating lenders, geographic distribution, and financial outcomes. The bill also appropriates $1,500,000 from the Special Fund for the program's initial operation, with the entire act taking effect on July 1, 2026.